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4 Steps To Become a Buy and Sell Palm Oil

When most people hear that palm oil business is very lucrative, they quickly dismiss the idea of taking a plunge because starting up a palm oil processing company requires much more capital than they can ever afford.

But the truth is that you too can tap from the opportunities in the palm oil business without necessarily having to set up your own processing company or starting a palm plantation. How? You can achieve this by buying and selling palm oil for profits. In fact, you can make millions just by buying, storing, and reselling palm oil. One of Nigeria’s billionaires, Orji Uzor Kalu started out in business as a palm oil trader and he made millions from this business.

Before I discuss the steps involved in buying and selling palm oil for profit, let me enlighten you about the commodity and its marketability. (I am assuming you do not know anything about it before now. Pardon me if you already did).

4 Reasons Why You Should Start Trading Palm Oil for Profits

Palm oil is a natural extract from the red palm fruit. It is orange or yellowish red in color, and it is widely produced in West African countries and in Far East countries such as Malaysia and Indonesia. In these countries, it is widely consumed by the natives, and it is also exported to neighboring countries.

Palm oil owes its huge demand in countries such as Nigeria and Malaysia in part to its huge population and health benefits. Palm oil is a good source of vitamin E, which promotes healthy skin. It is also rich in carotene, which enhances vision. And most importantly, unlike most other oils, it doesn’t promote the accumulation cholesterol and low-density lipoproteins that are harmful to the body.

Another reason why palm oil sells well in the above-mentioned countries is its relative cheapness when compared with other edible oil, and its relatively long shelf life. With proper storage, palm oil can last up to one year without losing its quality.

In Nigeria and other West African countries, virtually every household cooks with palm oil. So, you can imagine how much profit you can make from the market in these countries.

With the above in mind, let’s now discuss how the business of buying and selling palm oil works. It goes without saying that this business simply involves buying palm oil and selling palm oil, but there are two methodologies of running this business; and you are free to choose any of the two or even combine both.

How to Make Money Buying and Selling Palm Oil

Choosing your palm oil business model

The first model involves buying the commodity, adding some margin, and selling to the next available buyer. Though you won’t make huge profits with this model, you will make smaller profits on a consistent basis. The downside of this model is that you may be badly hit by sharp drops in the price of the commodity, which happen occasionally. But there are two sides to this possibility; you can make huge profits during occasional price surges as well.

The second model involves buying during the time of the year when the commodity is abundant, and selling only when it becomes scarce. Usually, in Nigeria, palm oil sells cheapest between February and April (because it is abundant during that time of the year), and market prices go up between September and January.

So, if you buy 1000 liters of palm oil when it’s cheap, keep it, and sell it when the prices go up, you can make between 100% to 200% profit or even more depending on the scarcity and on your location within Nigeria. It’s the same story in other countries where there is huge demand for palm oil.

In Nigeria, a 20 liter can of palm oil sells for N3,000 – N4,000 during the abundant season (depending on your location). During the scarcity period, that same 20 liter can goes for N6,500 – N8,000. In Nigeria, palm oil can be sourced at a cheap price in places such as Edo, Delta, Abia, Imo, etc and resold at a profitable price in places such as Kano, Lagos, Kaduna, Abuja, etc. Most times, traders record huge profits by adopting the second model; but it usually requires larger capital than the first model. Having explained the methods of running a palm oil trading business; let’s now discuss the steps involved in starting the business.

How to Start Buying and Selling Palm Oil for Profits

1. Get your storage space

You will need to secure some pace for storing your palm oil, regardless of the business model you choose to adopt. If you have some storage space right in your home, that would guarantee rest of mind. But it would be better to have your storage space close to where your customers are. So, renting a shop near a local market around you is a very smart idea. In Nigeria, palm oil is best stored in big blue drums / barrels, in a cool place away from direct sunlight. It takes about 8 – 10 (20liter) gallons to fill a barrel.

2. Arrange with suppliers

Aside customers, your business needs suppliers to thrive, since you are not processing the commodity yourself. Try to find suppliers that produce high quality palm oil. You may need to conduct thorough research before making your choice because the success of your business would hinge largely on the quality of the palm oil you get from your supplier. From personal experience, i can say that good palm oil can be sourced from Imo state in places such as Ngor Okpala, Ihitte Uboma, Orlu, etc.

3. Decide on transport arrangements

You would need to transport your palm oil from the supplier’s location to your shop or storage location. And in some cases, you would need to transport palm oil to your customers as well. (In fact, you can make more money by charging extra for delivery. Buyers would readily pay for the convenience). Most times, palm oil are best transported in gallons and if you are transporting from Eastern Nigeria to either the Western or Northern part of the country, you can use the services of popular transport companies such as The Young Shall Grow Motors, G.U.O Motors, etc. If you have a van or truck to yourself, that would be fine. But if you don’t have one, you would need to hire one each time you need to transport your commodity.

4. Market and sell your product

To make profit, you need to find buyers for your product. You would easily attract them if you offer high quality palm oil for unbeatable prices. Depending on your chosen model, you can choose to sell your commodity to the next available buyer, or wait until prices go up before selling.

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